TELECOM Digest OnLine - Sorted: Re: Home Phones Face Uncertain Future

Re: Home Phones Face Uncertain Future

Lisa Hancock (
1 Nov 2004 12:54:46 -0800

w_tom <> wrote

> Common mistake when predictions are based upon business school
> concepts rather than first learning the details.

While some of what you say is true, I must disagree with other
parts. Business school concepts definitely have their place.

> Third generation cell phone technology has finally made standard
> (POTS) phones obsolete.

"Technology" is not _instant_. Just because a new technology is
perfected does not mean other technologies are "obsolete". A lot of
technocrats are so enamoured with new stuff they fail to understand
the big picture.

First, it takes time to implement new technology. For example, a
great many people out there do not have cell phones nor wish to have
one. Others have them but use them only for emergencies and have
$15/month plans. Many people get something new only when their
existing machine wears out; not everyone is enamored with the "latest
and greatest".

Secondly, new technologies must mature. Things are improving, but
many cell phone users get cutoff in mid conversation. When compact
discs were first introduced, their sound and operation needed tweaking
to get widespread acceptance so serious listeners would replace their

Third, new technologies have a new cost that not all consumers are
willing -- nor should -- have to pay. A consumer perfectly happy with
POTS service should not have to pay the $40/month for cell phone
service. An occassional $15/month emergency-only cell phone user
likewise shouldn't be forced to upgrade. The computer manufacturers
finally learned that people weren't so ready to upgrade their PCs so

Fourth, the implementation and marketing of technology is critical.
Dilbert might make fun of the marketing types, but they are necessary.
The genius of Edison was not in the light bulb, but rather a whole
power generation and distribution network to make the light bulbs work
and earn money from them.

> The baby Bells are not dominated by myopic MBA managers whose
> education literally destroys both innovation and what little remains
> of AT&T. AT&T management has a static perspective because they view
> from anti-innovative B-school concepts. If AT&T still ran the baby
> Bells, then Nokia's predictions would have merit. But baby Bells
> (about 10 years too late) suddenly realized that they too will go
> the way of the anti-innovation AT&T. Baby Bells are finally, after
> more than 50 years, rewiring their entire network.

Being an "MBA manager" is neither good nor bad in itself. Sure, one
could point to plenty of very successful businessmen who had an 8th
grade education, just as one could point to 3-pack-a-day smokers who
lived to be 105. But most business people make good use of skills
taught in business school.

I don't agree on AT&T being "static" at all. Their management tried
quite a few different avenues, they just didn't work out, it was not
for lack of trying. Guessing wrong does not make a company "myopic",
hindsight is always 20/20, foresight is not. Over history, many
'wrong' business predictions were perfectly reasonable and logical at
the time they were made.

When a businessman takes a longshot and wins, people call him
"shrewd". If his longshot loses, people call him other less
complimentary things. We read about the success stories with great
fanfare, but not about the many more losers.

Baby Bells most certainly did NOT wait "50 years" to rewire their
networks. A lot of people believe -- wrongly -- that the phone
network at the time of divesture was all ancient. True, some of it
was, but a very great deal of it was state of the art for its day.
Bell Atlantic was 100% ESS after divesture, and shortly later was 100%
digital, just to give an example. Trunks between offices were
advanced high capacity.

> But don't expect mobiles to replace land line just as IBM found new
> purpose in their core businesses (once IBM replaced their MBAs with
> computer guys, then IBM rediscovered innovation meaning that a main
> frame is no longer a dinosaur).

While agree mobiles won't replace totally land lines, there are a
couple of errors here. What I expect is that mobile were supplement
land lines. A suburban family with teenagers that might have had two
or even three voice lines in the house may get by with a single line,
and use cell phones for the rest.

As to IBM, IBM did not go back to its "core business", nor did it
replace its MBAs with computer guys. Actually, IBM has reduced its
core business -- manufacturing and selling computers -- and wisely
supplemented it with consulting and service bureau work which was once
a small subsidiary. The "computer guys" didn't make this transition,
but rather an outsider, the former head of Nabisco (Gerstner sp?). I
don't know if he had an MBA or not, but I think he did.

> Devil is always in the details which means the manager must have 'dirt
> under his fingernails'.

That is true.

> Without a long detailed list of advantages and disadvantages for
> each technology combined with a list of future markets and
> innovations, then one can only make predictions like business school
> graduates and that BBC article.

Not true. Predicting the future, whether it be the tomorrow's weather
or markets for new technologies, is always a gamble. There are always
variables that are a guess, plus variables no one expects.

> These latter people routinely stifle innovation because they don't
> have education from where innovation happens. Spread sheets and
> marketing mentalities are important peripheral parts of business;
> but only with a short term perspective.

Without a "marketing mentality", innovation is worthless. Without
a good cost/pricing strategy, products cannot be manufacturered nor
services provided. Having technology without a way to get it in the
hands of customers is worthless. The Watson father/son didn't know
squat about any technology, but they knew marketing. The ENIAC-Univac
people were experts in technology, but didn't know squat about
marketing. It didn't take long for IBM, using its marketing skills,
to quickly surpass ENIAC-UNIVAC's way superior tech skills.

> To see the future of land lines with a long term perspective, one
> must apply knowledge and experience of the technology.

Yes and no. In the late 1970s, the "knowledge and experience" of
computers was using punch cards as an input medium. Note that when
more modern gear (ie key-to-disk, on-line terminals, PC-DOS) replaced
the punch card, they kept the principles -- 80 column screen, auto
numeric shift, 'drum card' field setup, etc. That's what the technies
were used to.

But the techies were wrong! It turned out that the future belonged to
something entirely new -- the GUI screens and Windows that had no
connection to the punch card style whatsoever.

> Any land line company that intends to be alive in 10 years will have
> replaced or duplicated their entire network in fiber -- and learned
> new products based upon the new demands of that technology.

Who knows if fibre will be dominant in ten years?

Keep in mind there's an excess today of fibre capacity; that means
some companies that built fibre networks are losing money from lack of

Don't ask me why, but Picturephone service never caught on, while cell
phones cameras and text messaging are very popular with kids.
(Punching in text on a tiny phone keypad seems ludicrous, but they
love it.)

> Standard technologies potentially on the chopping block: faxes,
> portable phones, conventional dial up phones, international shortwave
> broadcasting, and maybe even conventional letters.

It takes an awful lot for a technology to become truly discontinued.
What usually happens is that an older technology remains in use, but
yields market share to newer technologies. They still make
typewriters for example, but most such work is done on computers now.
Further, older technologies may offer a backup. (Yes, there are some

> Any Baby Bell that uses the
> bean counter concepts of cost controls is doomed just like Western
> Union and AT&T.

"Beans" are basic to a business. If you don't count your beans, you
will go out of business.

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